Gordon Medenica Interview …continued from page 18perhaps there is a way to use your association to do it.G. Medenica: That’s the tough issue, funding.How do specific state rules apply to the applicationof NASPL funds towards a purposelike lobbying at the national level? I think thevendor community would be willing to participateand contribute to funding that kind of aneffort. But it gets tricky on a political level. CanNASPL accept money from the vendor communitythat would be a contribution to lobbying?Can state lotteries pay dues to an organizationthat acts as a PAC? It would be a very good thingfor both states and lotteries if we could addressour concerns satisfactorily, because we really doneed to have an advocate on Capitol Hill. Everyoneelse in the gaming industry is spendinghuge sums to lobby on their behalf, and lotterieshave no voice, no advocate to even explain ourpoint of view. So, our congressional representativeswho are making decisions on issues like Internetgaming, sports betting…they get an earfulfrom everyone except state lotteries. That is notgood for the interests of the state or the public.A slightly different area that I am wondering mighthave potential for collaboration between lotteries…When I see all the TV commercials competing for theBatchy Awards, I’m quite astonished at the qualitythat’s being produced and the amount of money thatmust be spent to create all this television advertising.It seems to me that there are many commonalitiesbetween all these commercials and that the 40+ U.S.lotteries could get together and share some of thosecosts. Wouldn’t there be potential costs savings oftens of millions of dollars. Do you have any thoughtson the possibility of creating a collaborative effort betweenlotteries to produce TV commercials?G. Medenica: It has been discussed. Theproblem lies in the fact that lotteries haverestrictions about what can be said and donein the advertising. And those restrictionsand guidelines differ from state to state. Thatmakes it very difficult to produce a commercialthat is compliant with all these different rules.For instance, the Washington State Lotterymade a wonderful commercial called ‘EveryBird Should Fly’ and made it available to otherlotteries to use. It won the best of the Batchy’s.But I don’t think it has been used by other lotteries.(Editor note: the WA Lottery confirmedthat nobody has used it as of January 1, 2010.)Now you’re going to point out that just becauseyou can’t get everyone to sign on to acooperative cost sharing program doesn’t meanyou couldn’t benefit by getting ten or even fiveor even, for that matter, two lotteries to split thecosts. You know we have considered the possibilitiesbecause we’ve all discussed it together withLeo Mamorsky (DDB New York advertising executivewho manages the NY Lottery account).The analogy I use is that on the systems, support,and ticketing side of the business, we have just ahandful of major vendors between GTECH, ScientificGames, Intralot, Pollard. All the lotteriesbenefit by having a lot of commonality so thatthe cost of providing solutions is brought downand the quality and effectiveness of those solutionsis brought up. I think the vendors benefitas well from economies of scale and being ableto leverage their R & D and product developmentto support a large number of customers,and receive the increased revenue from thoseextra customers. Think about how less cost effectiveit would be if every online contract wereserviced by a different company which neededto incur all the R & D and product developmentcosts as well as acquire the skill sets on the humanresources side of the business to service justone contract. Obviously, the costs of doing thatwould be much higher. Theoretically, this samedynamic would apply to the advertising side ofthe business too, with significant efficiencies tobe gained by spreading the costs between two ormore lotteries. DDB New York is our agency andthey are a part of the Omnicom Group, whichhouses a large number of agencies all around theworld. There are a number of lotteries which areserviced by agencies which are also a part of theOmnicom Group. You’d think we could at leastget these agencies to work together. But the advertisingworld does not seem to work that way.Even in the case of the Omnicom Group, theagencies work independently from each other.They don’t really operate as divisions of thesame company. Looking at the way these agencieswithin the same company tend to competewith each other instead of cooperating makesme think that getting advertising agencies towork together is difficult at best. There are otherobstacles, and when you add them all up, it mayjust be more trouble than it’s worth to try to collaborateon advertising.I suppose everyone likes to think that theirmarket is unique and what works in New Yorkwouldn’t work in other markets.G. Medenica: And of course there’s somethingto that, of course there are differences. Irespect the fact that advertising creatives dotry to be relevant to their specific markets andproduce campaigns that really resonate with thecitizens of the specific regional market. But still,there are also many commonalities and so weshouldn’t necessarily allow the fact that thereare differences in regional markets to preventus from leveraging those commonalities. Butit’s true that this perception of differences is certainlyan obstacle. And, most of the ad agencieswould not see this as a benefit to them and wouldwant to convince the lotteries that it would bea big mistake to try to forge a collaborative approachto advertising. Maybe what we need is avisionary from the advertising side of this industryto champion this kind of innovation. Lotteriesthemselves have always been very generousabout sharing this kind of thing with one another,so I think they’d have a receptive audience.Having said all that, I do think there are benefitsto be gained by lotteries working togetheron advertising. And in fact, there’s an interestingeffort going on right now related to the PowerballMegaMillions launch to collaborate on acampaign that would be national in scope. Forexample, we explored the possibility of buyinga Superbowl spot. Something like this has nevermade sense before and may well not make senseever again. The Superbowl is scheduled for February7th, one week after the targeted launchdate for many lotteries to sell both multi-statejackpot games. This fortuitous timing createdthe impetus to do something on a big scale, likea Superbowl ad.’ We offered to produce the spotand to put a significant contribution towardsthe media purchase. GTECH also agreed to bea sort of charter funder. We opened it up to allthe member lotteries, and we got a lot of support.Lots of support and lots of people willing to pitchin. But it looks like it’s not going to happen. ASuperbowl spot costs something on the order of$2 million to $2.5 million, and we ended up shortby about half that number. But we’re going aheadand producing a spot, and the spot promotes bothgames, Powerball and MegaMillions. We’re goingto offer it basically for free to anybody whowants to use it. As we talked about, that doesn’tmean it will be used by everyone because all lotterieshave their own set of rules and restrictionswhen it comes to advertising. Also, we need towork out the residual rights fees issues for talent,music and the like and how those are charged.These seem to be two stumbling block for producingads that are shared between lotteries: theresidual rights’ fees issues and the need to re-workthe ad for use in the individual jurisdiction.The selling of both games in most of thelotteries does create even more incentive toovercome those obstacles. For example, to buythe Superbowl spots through the local affiliateswould cost around $300,000 in New York If wecould purchase the national spot for $2 millionand share the cost between 35+ lotteries, thenthat would obviously be a hugely cost effectivecampaign. So I think it’s something that willhappen eventually. It may not happen for theJanuary 31 launch, but everyone’s aware of thebenefits and, I think, very supportive of theconcept in principle. Everyone wants to findeconomic efficiencies, especially in advertising,since budgets are so tight everywhere. u<strong>Public</strong> <strong>Gaming</strong> International • January 2010 20
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